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Is cutting red tape the first step in an energy revolution?

Scissors cutting red tape

This week it was announced that smaller energy suppliers can cut some of the red tape and will be exempt from two government programmes. At First Utility, we’re glad the market’s finally being shaken up.

Ever since privatisation, there have been frequent calls from consumers and industry bodies for greater competition in the energy market.

I’ve been lobbying with First Utility for several years to encourage changes that will enable greater competition and innovation within this sector. So, earlier this week, it was very positive to hear that we may indeed be moving closer to the change that’s so desperately needed.

Time for a more competitive market

On Monday, the government department for Energy and Climate Change (DECC) announced that it would remove an obstacle to growth that we (along with several other energy firms) have been campaigning on for some time now.

It means that, from next year, energy companies with fewer than 250,000 customers will be exempt from two costly government programmes – The Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP).

Previously, suppliers with as few as 50,000 customers were obliged to participate in these schemes, placing a huge (and disproportionate) burden on small suppliers, effectively acting as a barrier to market entry and reducing incentives to grow.

In turn, this contributes to a less competitive energy market for consumers, as innovative new suppliers were presented with unrealistic market conditions in which to challenge the ‘Big Six’ companies.

An energy revolution?

Yesterday’s announcement is a significant milestone, and it’s encouraging to see that DECC has listened to the concerns and proposals of new entrants such as ourselves. New suppliers are key to shaking up the UK’s energy market and often provide customers with significant value-added services (in our case, a free smart meter for all customers) to differentiate themselves within the market.

Such services are driving much-needed innovation and empowering people to adapt their behaviour and reduce their long-term energy consumption, regardless of the unpredictable nature of wholesale energy costs.

Some major issues still remain within the energy sector that need to be resolved to allow the type of success that privatisation brought to the telecoms sector. Not least of these is the urgent need to clarify the full details of the wider UK smart meter roll-out. But for the time being, this week’s announcement is a welcome step in the right direction.

What do you think of these changes – do you agree that they will shake up the energy market? Should smaller energy companies have even more red tape removed to allow them to offer more competitive packages to customers?

Comments
Profile photo of dean
Member

“Such services are driving much-needed innovation and empowering people to adapt their behaviour and reduce their long-term energy consumption, regardless of the unpredictable nature of wholesale energy costs.”

ah OK, so it’s our fault, now I get it…..

We already have decreased our energy consumption, fitted government approved lightbulbs, installed insulation, etc etc etc, yet still it’s down to our behaviour? rubbish, I think there should be more red tape to stop energy companies blatantly profiteering (as happened to me a few years ago).

I do think there needs to be less regulation on climate change though, because that is just a way to fleece more money out of you and us and seeing as it is based on a lie, taxing the only thing that they can prove without addressing the wider issues and benefits shows how much of a folly it is

Profile photo of dave d
Member

I have a lot of sympathy with Dean’s view, even though I disagree that we need more red tape as such.

What we desperately need is legal protection against profiteering, as Dean says, but this doesn’t have to be red tape nor does it have to adversely affect small companies.

It also needs a government with guts and who don’t rely on capitalism to underpin everything they do, and we’ve not had one of them since the 2nd world war, so don’t hold your breath.

Profile photo of Jenny Driscoll
Member

Your points reflect a common view among people who feel frustrated about the energy companies and many simply do not trust them. Which? is constantly pushing for companies to open up their books to the energy regulator to show they are accountable. They say they are not ‘blatantly profiteering’ from utilities, which we have to pay for. We say prove it!

Re Darren’s blog. Something has to happen to try and shake up the gas and electricity markets and small competitors have a role to play. As I’ve said in a previous blog, it’s as though the big six are at the party hogging all the food in the kitchen. Smaller players need to be able to elbow their way into this market so that consumers can have more choice. More competition for the big six may help – maybe not a lot….. but it could help.

Profile photo of b martin
Member

I do not expect to see a revolution in energy supply due to the government proposals.
When will First Utility and the other small companies be announcing a price reduction ??
The bottom line is that it costs a certain price to generate, transmit and distribute electricity to the consumer and none of these companies is going to sell electricity or gas at a loss, hence the basic price to the small companies will be governed by the existing large companies. The small companies do not produce electricity or gas they only bulk purchase from the others and act as retailers.
If a revolution is required I propose the following.
Step 1.
All companies selling electricity and gas to have only one set of tariffs for domestic and small businesses ( up to 10 MWhr per year), a standard tariff and an off peak rate for each of the 14 regions (as offered by the Co-op for example),the tariff to be the same irrespective of the method of payment.VAT to be reduced to zero.
Stap 2
The 14 regional price structure to be abandoned and only one set of tariffs to be applied to the whole of the U K. The prices to be subject to the approval of OFGEM.
Step 3
All eletricity and gas companies to be required to be British companies registered in the UK and quoted on the London stock exchange and to be free of all forigen control.

Insted of winging lets have oyher peoples propasals!

Member
First Utility says:
17 June 2011

To see further response from First Utility’s Chief Financial Officer, Darren Braham, view the video on our blog – http://www.first-utility.com/blog/17/government-lifts-barrier-to-growth

-The First Utility press team

Profile photo of b martin
Member

The reply from First Utility does not answer the question; what price reduction can it offer since some of the government imposed costs have been removed?
Do the tariffs quoted by First Utility include VAT?
The only way that the small companies can grow is if they offer the lowest price, there is no other way. The price level will always be set by the generation, transmision and distribution companies.

Member
First Utility says:
24 June 2011

Unfortunately we have not had a monetary benefit from this news; the government imposed costs that you mention were not something we were paying as we had not reached the minimum threshold. The red tape was simply stifling our growth as it meant that our 50,000th customer would have incurred some significant extra costs. However thanks to the new threshold we can grow our customer database and better the competition in the energy market. All of our tariffs on our website include VAT. Regrettably we will not always be the cheapest in the market however we passionately believe in the added value of our smart meters and aim to educate people on their energy usage by giving them full visibility of how much gas/electricity they are using on an hourly/daily basis

– The First Utility Press Team

Member
David says:
12 January 2015

I switched to First Utility for better prices. After being with them for some time now, I have one complaint: although they ask for meter readings every month, they never tell me when a bill has been issued. I complained to them a couple of times and they said I should receive an email about an issued bill, but still nothing. I have to remember to go to my account and check. Not too much trouble, but other companies send emails advising of bills issued, why not First Utility?